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INTERGOVERNMENTAL GRANTS AND GRANTOR GOVERNMENT OWN-PURPOSE EXPENDITURES
PHILIP J. GROSSMAN
National Tax Journal
Vol. 42, No. 4 (December, 1989), pp. 487-494
Published by: National Tax Association
Stable URL: http://www.jstor.org/stable/41788816
Page Count: 8
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This paper examines the impact of intergovernmental grants on grantor government expenditures from the perspective of the grantor government politician. The theory and empirical evidence presented complement previous work that considered the impact of grants from the perspective of the voter/taxpayer. It is shown that the vote-maximizing objective of the grantor government politician will lead her to finance grants from both increased own-source taxation and reduced own-purpose expenditures. Empirical evidence suggests that an additional dollar of grants will reduce own-purpose expenditures by approximately $0.15.
National Tax Journal © 1989 National Tax Association